Expanding School Tuition Organization Tax Credits

posted by Chris Hagenow | 777.80pc
March 29, 2013

Among the many tax credits that are offered by the State of Iowa, one that I find among the most valuable is the School Tuition Organization (STO) tax credit. The program offers a 65% income tax credit for donations to a qualifying STO organization. These STO programs in turn use the funds collected to offer scholarships to lower-income families who want to choose a private or parochial education for their children.

Under current Iowa law, the total sum of these tax credits which may be offered statewide is capped at $8.75 million. The law also requires that at least 90% of the donations received be distributed back out in the form of student scholarships.

This year, I have the opportunity to work as the bill manager for House Study Bill 225, which expands the STO tax credit program, and raises the cap to $12 million. This expansion will increase the number of families that will be able to choose a private school for their children, and will increase the dollar amount awarded through these scholarships.

There are several schools in our community that are part of STO programs. Des Moines Christian School and Iowa Christian Academy are part of the Heart of Iowa STO and our metro Catholic schools, including Dowling Catholic High School, are part of the Catholic Tuition Organization.

The budget being crafted in the House reflects the anticipated revenue offset from raising the cap on the STO tax credits. Even with this expanded tax credit, we will make sure that our budget is transparent and balanced.

I was glad to help get HSB 225 passed out of subcommittee this week. The bill is now up for consideration in the full House Ways & Means Committee. Both Republican and Democrat legislators understand the value of empowering school choice, and many have expressed support for this expansion of the STO tax credits. I look forward to moving this bill forward.